Explained – Emiratisation rules for private sector companies
Over the past few years, the UAE government has made concerted efforts to increase the number of Emiratis working in the private sector. Traditionally, government jobs were seen as more attractive for Emiratis, whereas, the expats filled the vast majority of the roles in the private sector. However, the government has increasingly tried to alter this trend. To do so, the government introduced Emiratisation rules for the private sector. Here’s a look at the rules private companies have to adhere to.
WHAT IS EMIRATISATION?
Traditionally the salaries offered by government jobs and working hours were seen as more favourable by the Emiratis. In recent years, the government has tried to encourage locals to develop further skills and become part of the private sector. To aid this process, Emiratisation rules for the private sector have been introduced and expanded by the government over the past few years. This programme is a part of the UAE Projects of the 50.
A quota of 2% was set by the government for hiring Emiratis in private companies in 2021 with the launch of the Nafis Programme. A deadline was announced later which resulted in fines at the start of 2023. Rules were updated further in 2023. All mainland-registered, private companies which employed a minimum of 50 employees were asked to employ at least 3% Emiratis in the workforce by 7th July 2023.
Once that deadline had passed, the Ministry of Human Resources and Emiratisation announced a new set of Emiratisation rules for private sector companies on the 11th of July 2023. This also brought companies employing 20 to 49 employees in this remit. Such companies must employ at least one UAE citizen by 2024. By 2025, they ought to have two such employees as part of their workforce. Firms that fail to meet the deadline will face fines.
It is projected that the Emirati employment rate is set to increase by 6% next year, 8% by 2025 and 10% by 2026.
EMIRATISATION IN THE PRIVATE SECTOR: THE INDUSTRIES ON WHICH THESE RULES APPLY
New Emiratisation laws for the private sector apply to companies from the following 14 sectors:
- Information and communication
- Financial and insurance activities
- Property
- Professional and technical activities
- Administrative and support services
- Arts and entertainment
- Mining and quarrying
- Transformative industries
- Education
- Healthcare and social work
- Construction
- Wholesale and retail
- Transportation and warehousing
- Hospitality and residency services
FINES FOR FAILURE TO MEET THE EMIRATISATION RULES FOR THE PRIVATE SECTOR COMPANIES
The companies that failed to meet the 7th July deadline are facing a fine of up to AED 500,000. As per the new Emiratisation laws for the private sector, a fine of AED 42k would be imposed for each Emirati not being employed. The calculation was based on a penalty of AED 7,000 per month for failing to employ each Emirati. This penalty will go up by AED 1,000 annually each year of non-compliance.
Earlier, it was announced that any organisation that failed to reach the 4% mark by 2023 would have to pay AED 84k for failing to hire an Emirati and the fine would rise to AED 120k per Emirati employee by the year 2026.
Any company which has 20 to 49 employees and fails to hire at least one UAE national will face a fine of AED 96k from next year. By 2025, these organisations have to hire at least two employees with a UAE passport or face a fine of AED 108k.
Companies which are found to provide fabricated data will also face steep fines.
TOP-UP PAYMENTS
To help this transition period and help private companies to remain competitive in the market, the government introduced a programme to help them meet the salary expectations of Emirati graduates.
Under the Nafis programme announced in September 2021, an Emirati graduate would take home an additional AED 5,000 alongside his take-home salary. That figure was increased to AED 7,000 in November 2022. Additionally, Emirati employees with children can also get AED 800 per child every month, totalling up to AED 3,200 per family. It is the responsibility of the employer to sign up for this programme via the official Nafis Programme website.
FAQS ABOUT EMIRATISATION RULES FOR THE PRIVATE SECTOR COMPANIES
ARE ANY COMPANIES FROM THE ABOVE-MENTIONED INDUSTRIES EXEMPT FROM THESE RULES?
Companies which operate in free zones are exempt. Nonetheless, they are encouraged by the government to participate in the scheme.
WHAT IMPACT EMIRATISATION RULES FOR THE PRIVATE SECTOR HAVE HAD ON EMIRATI EMPLOYMENT NUMBERS THUS FAR?
In 2021, the government had planned to invest AED 24 billion to open up 75,000 new jobs in the private sector for UAE passport holders. By 2022, the aim was to ensure that 75,000 Emiratis joined the private sector over the course of four years. As of July 2023, more than 80,000 Emiratis had joined the private sector. So the original target has already been achieved which indicates how successful the scheme has been.
With the implementation of the new Emiratisation laws for the private sector, we can expect more of the same. A profound change has been seen in a short period of time and the UAE and its citizens will reap its benefits in the long run. Similarly, companies will have a larger and more diverse pool of candidates to choose from. A win-win situation!
